Industrial development agencies fighting reforms proposed in state budget plan

Debate is growing regarding new state oversight of industrial development agencies, changes that are outlined in the governor's 2013-14 executive budget released last week.

Titled "Loophole Closing Actions," the segment of the budget calls for reforming the way local IDAs offer state sales tax exemptions by having regional economic development councils oversee them.

The IDA reform proposal -- found on Page 64 of the executive budget -- aims to make IDAs more accountable by limiting the industries to which they can offer state resources to sectors eligible for New York's Excelsior tax credits. Those sectors are: scientific research and development, software development, agriculture, back office operations, distribution centers, financial services data centers and manufacturing.

IDAs offer state resources, like sales tax exemptions, to companies considering settling in a municipality, without any input from state officials. The director of the state Authorities Budget Office, David Kidera, said that in the past two years the state has lost an estimated $100 million in state sales tax revenues from IDA-approved projects.

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While his office does not hold an official opinion on the proposed IDA reforms, Kidera says the topic should at least be discussed.

"If we're forgoing this level of revenue, we should debate what we are getting in return -- how many jobs and what kinds of jobs," Kidera said Tuesday.

The New York State Economic Development Council, a membership-based organization that represents roughly 900 IDAs, local development corporations and other economic development professionals, is formulating a battle strategy.

On Tuesday, NYSEDC Director Brian T. McMahon emailed the IDA directors in the organization a memo calling for an "aggressive grassroots campaign," complete with action timelines and a voluntary dues assessment of IDAs to raise funds to retain a lobbying firm in Albany. The lobbying firm costs $60,000 and will require the support of at least 30 IDAs to fund.

"We need to operate at the speed of business and government, and this proposal would result in the state and communities losing much more than what the budget division proposes it will save," McMahon said.

The Loophole Closing Actions proposed in the budget are projected to produce $7 million in additional tax revenue for the state, a figure that Lawrence Benton, chief executive officer of the Saratoga County IDA, calls a pittance compared to the rest of the $137 billion state budget.

"It's just another attempt by the state to shackle the IDA's ability to assist with economic development in its own county," Benton said.

Benton added that even though some IDAs in the state may have abused their power and given away incentives they should not have, he stands by the Saratoga County IDA's track record since its inception more than 40 years ago.

"What the state is saying is that people on local IDAs across the state shouldn't have the authority to make that decision, that we need state bureaucrats to make that decision for us. The state is not a working partner but a hall monitor," Benton said.